Index divisor and Percentage of orders executions in gold

General
1

I’m Anaveerapp as im very much eager to know more about the stock market. The BSE sensex is calculated on the total free-float market capitalisation of all 30 stocks , which are listed on the BSE. As i understood the free-float market capitalisation (No of shares available for public to trade X market price of the share).
Q.01) What is the exact index divisor for BSE and NSE ?
Q.02) How the calculation of index divisor is done at the time of adding or removing of companies in BSE 30 stocks?

General question
Q.03) what is the percentage of orders delivery of gold is happens in NSE, It is highly risky right ?

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2

Index divisor? what is that?

Trading of Gold on NSE - Gold ETF’s or gold bonds? I am guessing you are referring to gold futures trading, it trades on MCX. Yes futures trading is very risky and delivery of gold futures is extremely small.

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4

Thanks Sir,

Sensex = Free-float market capitalization of index constituents/ Base Market capitalization * Base Index Value

The Sensex is calculated like this:

The market capitalization of each of the 30 companies comprising it is calculated by multiplying the price of their stocks with the number of shares issued by that company. They are then added up.

The market capitalization is then multiplied to the free-float factor to derive the free-float market capitalization. (The free-float factor of a company is the multiple with which the total market capitalization of that company is adjusted to arrive at its free-float market capitalization. It is determined by the BSE based on the information submitted by the companies. It generally excludes promoters’ holding, government holding, strategic holding and other locked-in shares that will not be traded in the markets.

The free-float market capitalization of the Index constituents is then divided by a number called the Index Divisior. Index Divisor is equal to the Base Value of Sensex (=100) divided by the Base Market Capitalization.

So i wanted to know what exactly the Index divisor ?

5

Hmmm… have you checked this on the BSE website?

Btw, I just googled for index divisor, it says: The index divisor is an arbitrary number that is first defined when an index is first published. It’s initial use is to divide the total value of the index to produce an initial index value that is a number which is easy to handle

So base value or index divisor as you are saying for BSE sensex was 100 and base year 1978-79

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6

Thanks sir,

I got it !

I didn’t got the answer for my second question, 02) When the changes in the list of 30 stocks, does it effect the index divisor ?

7

No it doesn’t, the starting point remains the same - so 100 for sensex (1978) and 1000 for nifty (1994)

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8

Yes sir, even i agree that base value won’t effect, what about the base year market capitalization?

9

No, how can base year and cap change now?

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So, whatever the changes in the list of top 30 stocks, it won’t effect the base value and base year capitalization right sir ?

11

No of course not. Base year and index are fixed.

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12

Thank you so much sir, for giving me your valuable time to reply my queries.

13

Here you have confused base index value with index divisor. 100 for sensex is base index value and not index divisor.
If someone has figured out please let me know what is the index divisor that is finalized based on market capitalisation for the year 1978-79